Global Value Chain Participation and Firms'Responses to Exchange Rate Fluctuations

Greater participation in global value chains(GVCs)has highlighted the impact of exchange rate shocks on international trade.This paper examines how such participation influences firms'responses to exchange rate movements,focusing on the relationship between firms'pricing and value-added in exports.This study,using detailed Chinese firm-level data,demonstrates that firms with a high degree of GVC participation reacted to currency appreciation by lowering their export prices more substantially and reducing their export volumes less.This is mainly attributable to the"cost-hedging effect"within the marginal cost channel and the"pricing inhibition effect"within the markup channel.By categorizing export firms by trade models and product types,this study further demonstrates that processing trade firms at the low end of the value chain and those with low product differentiation were more inclined to absorb exchange rate shocks.This study adds to the existing theoretical framework and provides strong evidence for China in deepening GVC integration and supporting the development of high-quality export firms.

Heterogeneous impacts of GVCs participation on CO_(2) intensity:Evidence from developed and developing countries/regions

The deepening of global value chains(GVCs)has made remarkable impacts on the environmental outcomes of all countries/regions.What are the differences in environmental burden undertaken by countries/regions at different stages of economic development are a question worthy inquiry.This study compares the impacts of GVCs participation degree on CO_(2) intensity between developed and developing countries/regions.Using panel data of 19 manufacturing industries in 43 countries/regions over the period of 2000-2014,it is discovered that the deeper participation in GVCs of developed countries/regions significantly reduces their CO_(2) intensity,while the more participation in GVCs of developing countries/regions significantly increases their CO_(2) intensity.Additionally,the quantile regression results reveal that the reduction of CO_(2) intensity is increasing for industries with higher initial CO_(2) intensity for developed countries/regions,whereas for developing countries/regions,only industries with initial low CO_(2) intensity experience significant increases in CO_(2) intensity.We further analyzed the effect of GVCs participation degree on CO_(2) intensity for high-tech and low-tech industries and discovered that the effect is only significant in low-tech industries.These findings provide empirical evidence for the pollution haven hypothesis and offer enlightenment to formulate future trade and environmental policies.